United Republic of Tanzania

Tanzania: Business for Development Supports New Policy Discussions on Agriculture

The Tanzanian government and donors have directed much of their support for agriculture to production and food security, focusing mostly on the supply-side (production and related-food security interventions). Yet, as our Tanzanian country case study shows, little attention has been paid to commercialisation mechanisms - one of the reasons why, together with the African Development Bank, we recently organised a seminar in Dar es Salaam.

"This seminar has come at the right time given the recent global food crisis which has hurt the African continent most."

Agriculture is a key sector in the economy of Tanzania, providing employment to more than 70 per cent of the population and contributing 26.5 per cent of the GDP. Yet, its potential remains largely untapped: only 23 per cent of arable land is utilised. As the graph above indicates, Tanzania has a comparative advantage in the production of crops including non-traditional crops.

The agriculture sector remains dominated by self-sustaining smallholders and the sector has grown on average only 4.7 per cent in the period 2000-06. Currently the sector is clearly underperforming; in order to raise productivity, the transformation and commercialisation of the agricultural sector has to be pursued by the Tanzanian government and donors. However, presently farmers are only focusing on self-sustainment: a change of mindset is also necessary on the side of producers.

Farmers need to become entrepreneurs

Commercialised agriculture is one where farmers plan their production and execute such plans for the market. The objective function of the production entities ought to be maximising profit. Very few Tanzanian smallholder farmers have this as their objective function.”

Professor Andrew Temu from Sokoine University, Tanzania

Recommendations for an action-centered agenda arisen from the seminar discussion

- Governments and development partners must reverse years of policy neglect and remedy massive underinvestment and disinvestment in agriculture.

- Commercialising agriculture in Tanzania is a scale issue: policies, strategies, programmes and projects have to move beyond subsistence.

- Best practice in irrigation must be established for public funded irrigation schemes.

- There is a need for investment incentives: government should reduce the current agriculture corporate rate tax, currently at 30%; (this incentive for the private sector has already worked in Tanzania for the mining and tourism industry).

- Linkages within the value chain of agricultural production must be strengthened.

- Tanzania should take advantage of rising local and regional demand and develop its agro-food processing industry.